Oz Blog News Commentary

The report card

April 23, 2017 - 10:10 -- Admin

Former minister and Liberal Party director Andrew Robb recently completed an investigation into the poor performance of the Liberal Party in the 2016 federal election. Yes, they won by a whisker, but losing 14 seats is a drubbing. Former PM Abbott’s chief of staff, Peta Credlin, writing for the Daily Telegraph has her theory

On two separate occasions over the past 10 years, Malcolm Turnbull has plotted to seize the Liberal Party leadership from the incumbent. On both occasions, the polls hit high highs, and then low lows. On both occasions, the base deserted Turnbull and on both occasions, the considered judgment was he had a plan to take the leadership but he had no plan to run the party, or the country.

Robb was probably a little less biased, claiming according to Fairfax media

The review argues the party needs to "recognise and respond to the fact that the next campaign effectively begins the day after polling day" and establish a structured research operation that provides politicians with a "continuous understanding of community sentiment" towards policy.
It argues Liberals must "while governing for all, at all times respect, and be seen to be respecting our base".
This underlines the party's need to focus on the mainstream - necessary to win elections - while also pleasing core conservative supporters who demand action on deeply held but potentially divisive policy positions, such as free speech and tax cuts.

Both Credlin and Robb are pushing the same argument. A political party must appear to have a plan to be successful. The plan must be continually honed to be attractive to the particular requirements of the ‘rusted-on’ supporters as well as society in general. The alternative is the proverbial baseball bats on the verandah at the next election, to which a number of ALP politicians as well as Newman, Barnett, and Turnbull can personally attest. It is a lesson that is forgotten more often than remembered – apparently. Opinion polls would suggest that Turnbull hasn’t learnt the lesson.
One of Turnbull’s actions in the last session of Parliament was to steer tax cuts for business through the House of Representatives and the Senate, unfortunately at the same time the Centrelink ‘robo-debt’ farce continued. Regardless of the claimed benefit to the community of tax cuts for business or recouping overpayments from Centrelink recipients, to be apparently giving business a reduction in tax while actively and aggressively pursuing those on lower incomes [possible paywall] for what are frequently non-existent or grossly inflated debts is certainly not a good look. As Mungo Maccullum observed in The Monthly [possible paywall]

With Turnbull having negotiated the reductions for small to medium firms through the Senate, it was thought that he would take his winnings and retire – that the cuts for the big end of town would be quietly removed from the table. But not a bit of it: Turnbull will plough ahead, pushing the doors marked pull and ignoring the lessons – not just from the last election, but from all the polling since.

The price of housing (predominately in Sydney and Melbourne) is a ‘hot button’ issue at the moment. Domain.com.au breathlessly (they would do that, they are a real estate sales site) reported in mid - 2015 that the median Sydney house price was in excess of $1million, with their economist, Dr Andrew West attributing

the huge growth to the high level of investor activity, with the $6.4 billion in loans approved over May – a record. “Sixty-two per cent of the housing market loan share is now investors – another record – and an increase of 27 per cent over the first five months of this year compared with the first five months of last year.

Last February, consumer rights group Choice co-authored a study that found

thousands of tenants are being discriminated against and live in a climate of fear.
The research, undertaken by CHOICE, the National Association of Tenants' Organisations and National Shelter, found that 83% of renters in Australia have no fixed-term lease or are on a lease less than 12 months long, and 62% feel they're not in a position to ask for longer term rental security.
Half the tenants who took part in the study said they've been discriminated against, and an equal percentage said they were worried about being blacklisted on a 'bad tenant' database.

During April, Choice looked at the economics of renting again and looked at Treasurer Morrison’s recent speech to the Australian Housing and Urban Research Institute and quoted Morrison as suggesting

housing prices in Sydney and Melbourne are causing people on higher incomes to remain in the rental market longer, causing a "concertina effect" that's impacting those on lower incomes.
"Over half of renters say they rent because they can't afford to buy their own property," says Morrison. "Because of this, they are staying in the rental market for longer – a dynamic that puts upward pressure on rental prices and availability, and even more pressure on lower-income households, increasing the need for affordable housing."

Rather than tackle the potentially difficult discussion around negative gearing, Morrison suggests that the way to reduce rental demand (and prices) is to increase the amount of rental properties available. While supply and demand does play a part, as Choice points out

The focus of property investment in Australia is capital gain, rather than yield – meaning investors make more money from selling a property that has increased in value than they get from rental income. As a result, there is little incentive for investors – particularly "mum and dad" investors – to hold onto investments for longer.

The treasurer emphatically ruled out any changes to negative gearing to temper investor lending on Monday.
His speech contained a continuation of the regular theme of specious reasons in favour of negative gearing that we have come to expect.

Jericho goes on to quote Morrison arguing against his own policy

you’ve got one set of circumstances over in Perth and to that matter in South Australia and Tasmania. I mean negative gearing and capital gains tax concessions exist there as well and property prices in Perth are going the other way or have been in the eastern states you’ve got a very different response

To demonstrate his point, Jericho argues

And yet Morrison – as did his predecessor Joe Hockey – also likes to suggests abolishing negative gearing will cause rents to rise because when it was briefly abolished in the 1980s, rental prices rose in Sydney and Perth, despite the fact they were flat elsewhere:
Thus for Morrison different house prices growth in different cities suggests negative gearing is not an issue, but different rental prices growth suggests it is.
Similarly Morrison continued to argue that negative gearing is mostly used by average income earners. He argued that “two thirds of those taxpayers who negatively gear their investments have a taxable income of $80,000 or less”.
That might be true, but of course it ignores that most of the benefit of negative gearing goes to higher income earners:
And crucially his argument ignores the fact that people use negative to gearing in order to reduce their taxable income below $80,000.

You may remember Abbott’s claim before the 2013 federal election that the ALP’s National Broadband Network plan was unnecessary and unaffordable. Abbott won the 2013 election and appointed Turnbull the Communications Minister to ‘demolish the NBN’. Paddy Manning has written a long and detailed article on the policy and practice behind the NBN as rolled out by firstly the ALP and then the Coalition Government (with Turnbull in charge for a considerable period of the time) and it is less than complimentary. There have been a number of opportunities where an intelligent politician would have changed course and delivered a better solution for all Australians – Turnbull didn’t.
Turnbull’s recent headline ‘successes’ include losing 14 seats in Parliament at the only election he has faced as Prime Minister, legislating corporate tax cuts while falsely accusing thousands of those who have relied on Centrelink of theft and perpetuating obsolete technology for political reasons. In addition, he still has hundreds if not thousands of human refugees suffering in Detention Camps. Robb’s review suggested that the next campaign needed to commence the day after election and while the Liberals’ conservative base needs to feel considered, there needs to be a ‘continuous understanding of community sentiment’.
Opinion polls, general sentiment and media coverage would suggest that Turnbull clearly doesn’t understand community sentiment. Additionally, his report card (marked by Liberal Party elder Andrew Robb) is a fail for the lead up to the 2016 election. Can Turnbull learn the lesson before the next election or another night of the long knives?

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